LESSON 1 / 4 · 6 MIN
What a liquidation is
Calculate roughly where a leveraged position gets liquidated.
With leverage you put up a deposit (margin) and borrow the rest. If the price moves against you enough to wipe out that margin, the exchange closes your position by force: that is a liquidation. You lose the margin, and the exchange sells (or buys) at market to close.
| Leverage | Margin | Move that wipes it out (approx.) |
|---|---|---|
| 2× | 50% | a bit less than 50% |
| 10× | 10% | a bit less than 10% |
| 50× | 2% | a bit less than 2% |
| 100× | 1% | a bit less than 1% |
'A bit less' because exchanges require a maintenance margin and charge fees: you are liquidated before losing 100% of the deposit.
Key idea
Bitcoin moves 2% in a normal day without anything special happening. At 50× that is enough to lose everything. High leverage is not a bigger bet: it is a bet on the path, not just on the destination.
On the site · /risk-calculator
Open /risk-calculator and see how position size changes when you move your stop.
Open it on the site →Check yourself
You open a 20× long. Roughly what fall liquidates you?